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Aventus Knowledge Series Workforce Diagnsotics

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Understanding Workforce Diagnostics (Analytics) and identification of potential BenefitsWhat is workforce diagnostics? analytics tries to empirically establish the link between these human capital investmentsT he words diagnostics and analytics are and shareholder /business value. used rather interchangeably in the context of Managing Human Capital In the last decade many organizations, have(HC). It is a broad term that encompasses, been caught off guard by the speed and severity of the downturns in their industry 1. Processes and associated tools that /economies and have been forced to slash track and measure specific workforce and restructure their workforce in huge variables like Employee numbers. They have been caught between Engagement, Learning Alignment the competing business demands of laying and Learning Effectiveness off for the current v/s recruiting for the future Measurement, Performance uncertain upturn. This has led to Measurement that have an impact on organizations including consultants asking organizational performance. fundamental questions like (A) could this 2. Tools that enable more robust situation have been avoided through better workforce planning and workforce planning and optimization? (B) 3. Analytical models that aim to What can organizations do to avoid running establish a link between human into similar problems in the future? capital investments and shareholder /business value. There are multiple tools and models that have been developed over the last few yearsThere are two primary reasons for the meant to address these issues. Some of thegaining prominence of this discipline. ones from the more prominent names include Oracle Work force analytics, CognosMost HR practitioners and their key business from IBM, Accenture’s Human Capitalstakeholders intuitively realize that there is Development Framework, Engagementa strong correlation between the investment models of Hewitt, Towers Perrin amongthat they make in their human capital others. Alongside this, domestic Indian firmsprocesses, and the performance of their also provide robust tools like the Star Selectbusiness on key indices like EVA, market model for attraction and retention.share etc. However, they struggle tomeasure the return on the investments that Most tools are administered online, andtheir organizations make or are required to have the flexibility of some degree ofmake in their HC policies, programs and customization. They can be used as both aprocesses. The answer to this is Analytics; diagnostic tool and a predictive model.Aventus Partners 1| P a g e

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How does it help ones organization?The tools /models depending on its objective the workforce and project futureand design help an organization: impacts in terms of opportunity costs and savings potential • Optimize its business outcomes by • Optimize its workforce by managing modeling different scenarios with labor costs, retaining critical skills, robust "what-if" financial modeling deploying personnel efficiently, and supporting strategic talent planning • Measure and benchmark the decisions. organizations engagement levels and • Evaluate the effectiveness of its identify the factors that drive the current human capital initiatives, engagement scores establish and then design and deliver • Use demographic age and other human capital programs that realize historical data to statistically analyze the business objectives. IllustrationLet’s take workforce planning analytics as an within my organization as well as inexample to see how potential benefits could the broader talent market.be identified. The following data andprojections are good pointers. • What skills will be hardest to come by? • How do my indices compare with that of the industry /competitors? • What skills will we lose on account of employee retirement and • What should be the balance between resignations? the head count and planned service delivery levels? • What is the impact on business projections and what will be our • What are the impacts on my response? business metrics, if we factor in broader economic and talent trends? In a nut shell the tool analyzes an organization’s entire workforce planning • What skill sets are critical to my information – including macro-economic, business and where the surpluses financial, and HR data and helps develop and deficits are likely to occur both plans based on the alternate scenarios.Aventus Partners 2| P a g e

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Wanting to use diagnostics?While deciding to use diagnostic tools the • Do you need to assess the level offollowing could help you in making your maturity of your human capitaldecision: processes relative to your competitors? • Do you have metrics that measure • Do your business executives need returns on HC investments? assistance to better understand the • Do you need practical guidance for value of human capital and to see the investments that are likely to how it connects to their own goals yield the greatest return? (In and objectives? attracting key skills, managing • Does your organization need a performance, addressing retention simple reporting tool or does the trouble spots etc ) business demand a tool that will help • How critical is real time information to forecasting and providing key operational performance and insights into effectively managing decision making (E.g. Wage costs, talent? overtime) for your organization?In short workforce diagnostics helps an organization understand its workforce, both currentand future, plan strategies and measure impact of their initiatives in real time.Aventus Partners 3| P a g e